Usman Khan has admitted his involvement in plans for terror attacks on the UK

An al Qaeda-inspired extremist called on British Muslims to claim benefits to raise funds for a terrorist training camp, a court has heard.

Usman Khan, 20, was secretly recorded talking about plans to recruit UK radicals to attend the camp in Kashmir, London's Woolwich Crown Court was told.

He said there were only three possible outcomes for him and his fellow jihadists: victory, martyrdom or prison.

Khan's home in Persia Walk, Stoke-on-Trent, was bugged as he discussed plans for the firearms training camp, which was to be disguised as a legitimate "madrassa", an Islamic religious school, the court heard.

Discussing terrorist fundraising, he said that Muslims in Britain could earn in a day what people in Kashmir, a disputed region divided between Pakistan and India, are paid in a month.

He went on: "On jobseeker's allowance we can earn that, never mind working for that."

During the late-night meeting on December 4, 2010, Khan contrasted the action he was planning in support of jihad with the passive approach of Muslims like radical cleric Anjem Choudary.

"Brothers like Anjem, they ain't going nowhere," he said.

Khan said he could only see three results: "There's victory, what we hope for, there's shahada (death as a martyr), or there's prison."

Prosecutor Andrew Edis QC, opening the case for the Crown on day two of a sentencing hearing, said: "Mr Khan, the prosecution say, reveals his intention to supply money and people to something which he describes in this as an existing set-up.

"He has recently returned from Pakistan, and the inference is he's been there, and is going back there within a few weeks.

"That set-up from the outside will appear like a normal madrassa, but the inference is clear from that conversation that that's indeed the place where firearms training will be available."

He added: "It is also quite clear that the hope is that there will be a significant number of UK citizens who will attend there."

Mr Edis said those who underwent training at the camp in Kashmir could have returned home and carried out attacks in Britain.

"When running a training camp of this kind, the prosecution say, they create a risk that they themselves or other graduates of it will commit acts of terrorism wherever they find themselves to be, using the skills they have acquired," he told the court.

Mr Khan, Mohammed Shahjahan 27, and Nazam Hussain, 26, all from Stoke-on-Trent, last week admitted engaging in the preparation of terrorism.

Mohammed Chowdhury, 21, and Shah Rahman, 28, both from east London, and brothers Gurukanth Desai, 30, and Abdul Miah, 25, from Cardiff, pleaded guilty to preparing for acts of terrorism by planning to plant a bomb in the toilets of the London Stock Exchange.

Omar Latif, 28, also from Cardiff, admitted attending meetings with the intention of assisting others to prepare or commit acts of terrorism, and Mohibur Rahman, 27, from Stoke-on-Trent, admitted possessing copies of al Qaida magazine 'Inspire' for terrorist purposes.